HTC CORPORATION

3Q14 BUSINESS REVIEW

CHIALIN CHANG, CFO / PRESIDENT OF GLOBAL SALES

EDWARD WANG, AVP OF FINANCE October 31st, 2014
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DISCLAIMER STATEMENT
• This presentation and release contain “forward-looking statements” which may include
projections of future results of operations, financial condition or business prospects
based on our own information and other sources.

• Our actual results of operations, financial condition or business prospects may differ
from those expressed or implied in these forward-looking statements for a variety of
reasons, including but not limited to market demand, price fluctuations, competition,
international economic conditions, supply chain issues, exchange rate fluctuations and
other risks and factors beyond our control.

• The forward-looking statements in this release reflect the current belief of HTC as of the
date of this release. HTC undertakes no obligation to update these forward-looking
statements for events or circumstances that occur subsequent to such date.
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EXECUTIVE SUMMARY
• 3Q Financial Highlights
• Revenue: NT$41.9 billion
• Gross margin and operating margin: 22.9% and 0.4%, respectively
• Net profit after tax: NT$0.6 billion, or NT$0.78 per share

• Business Overview
• HTC One (M8) momentum continued despite stiff competition
• Desire 610 and 510 experienced good demand, selling well in both the US and
Europe
• Desire 816 maintained solid sales throughout Taiwan, China, India and the Middle
East
• Desire 820, the world’s first 64-bit octa-core smartphone, was launched in China
and received wide distribution support from the major operators
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EXECUTIVE SUMMARY
• Product Innovation:
– ‘Double Exposure’ launch introduced:
• HTC Eye Experience, a powerful suite of imaging features that allows users to
better put themselves in the picture, including advanced face tracking enhances
the quality of video chat and conference calls, and an array of tools that enable
users to combine, merge or crop images in creative new ways.
• HTC Desire Eye, encapsulates this imaging focus, integrating all of the HTC
Eye Experience features with market-leading 13 megapixel cameras and
intelligent dual-LED flash at both front and back for superb photography and the
ultimate selfies.
• Zoe, a collaborative, social video-editing application, allows users to create and
remix videos into highlight reels comprising a couple of still images or entire
series of video clips, complete with soundtracks and themes, that can be easily
shared on social media.
• RE, a remarkable camera that conveys HTC’s vision of expanding the mobile
ecosystem beyond the smartphone.
– Nexus 9, the new premium tablet designed in close collaboration with Google that
boasts an array of advanced technologies.
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EXECUTIVE SUMMARY
• Awards and honors
• Adding to the number of awards received, HTC One (M8) was named ‘Best
Designed Smartphone of the Year’ by Mobile Choice and ‘#1 Best phone in 2014’
by TechRadar
• HTC Desire 820 followed in the footsteps of the Desire 816 in being honoured in
the 2014 ‘Best of IFA Awards’ by Android Central, and received ‘Best Mid-range
Smartphone’ by Android Authority.
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REVENUES AND OPERATING PROFIT

Revenues Operating Profit
NT$bn NT$bn

6
80
65.1 4

60 2.4
47.0 2
42.9 41.9
0.2
40 33.1 48%
0

20 2- -1.6
-2.0

0 4- -3.5
13Q3 13Q4 14Q1 14Q2 14Q3 13Q3 13Q4 14Q1 14Q2 14Q3
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GROSS AND OPERATING MARGINS

Gross Margin Operating Margin

% %

22.2 22.9
20.4 21.0
17.8 3.7

0.4

-3.7
-6.2
-7.4
13Q3 13Q4 14Q1 14Q2 14Q3 13Q3 13Q4 14Q1 14Q2 14Q3
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3Q 2014 P&L (CONSOLIDATED)

NT$bn 3Q 13 2Q 14 3Q 14
REVENUES 47.0 65.1 41.9
GROSS PROFIT 9.6 14.4 9.6
OPERATING EXPENSE 13.1 12.0 9.4
SALES MKTING. 7.5 7.6 4.8
RESEARCH DEV. 2.9 3.1 3.2
GENERAL ADM. 2.7 1.3 1.4
OPERATING PROFIT -3.5 2.4 0.2
NPBT -3.0 2.8 0.6
NPAT1 -3.0 2.3 0.6
GROSS MARGIN (%) 20.4% 22.2% 22.9%

OPERATING MARGIN (%) -7.4% 3.7% 0.4%

EPS2 (NT$) -3.58 2.74 0.78

1 Attributable to stockholders of parent company, excluding minority interest.
2 EPS was calculated based on number of outstanding shares at that time.
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3Q 2014 BALANCE SHEET (CONSOLIDATED)

NT$bn Sep 30, 13 Jun 30, 14 Sep 30, 14

TOTAL ASSETS 183.5 178.7 165.4
CASH 43.1 48.4 54.7
AR 30.9 36.3 25.2
INVENTORY 26.0 25.9 23.2
OTHER ASSETS 83.5 68.1 62.3
TOTAL LIABILITIES 106.3 100.5 86.6
1
TOTAL EQUITY 77.2 78.2 78.8
2
METRICS
DAYS SALES OUTSTANDING 83 46 74
INVENTORY TURNOVER DAYS 77 52 77
DAYS PAYABLE OUTSTANDING 146 84 132

1 Attributable to stockholders of parent company, excluding minority interest.

2. Financial metrics are calculated based on quarterly numbers, starting from 2Q 2012
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4Q 2014 BUSINESS OUTLOOK

• Revenue is expected to be in the range of NT$43 billion to NT$47 billion

• Gross profit margin is expected to be 19% to 21%

• EPS is expected to be in the range of NT$0.07 to NT$0.46

 HTC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNREVIEWED)
(In Thousands of New Taiwan Dollars)

September 30,2014 September 30,2013 September 30,2014 September 30,2013

Amount % Amount % Amount % Amount %
ASSETS LIABILITIES AND EQUITY
CURRENT ASSETS CURRENT LIABILITIES
Cash and cash equivalents $ 54,672,202 33 $ 43,119,840 24 Financial liabilities at fair value through profit or loss - current $ 13,290 - $ 19,871 -
Financial assets at fair value through profit or loss - current 275,725 - - - Note and trade payables 43,421,932 26 54,374,041 30
Held-to-maturity financial assets - current - - 100,185 - Other payables 34,565,203 21 42,473,734 23
Derivative financial assets for hedging - current 29,445 - - - Current tax liabilities 277,357 - 138,292 -
Trade receivables, net 25,234,361 15 30,933,802 17 Provisions - current 6,550,061 4 6,449,212 3
Other receivables 773,967 1 2,167,035 1 Other current liabilities 1,525,493 1 1,933,535 1
Current tax assets 247,383 - 391,628 - Total current liabilities 86,353,336 52 105,388,685 57
Inventories 23,209,305 14 26,022,627 14
Prepayments 6,389,171 4 6,350,136 3 NON-CURRENT LIABILITIES
Other current financial assets 666 - 2,805,927 2 Deferred tax liabilities 195,519 - 683,091 1
Other current assets 50,982 - 133,524 - Guarantee deposits received 40,091 - 261,320 -
Total current assets 110,883,207 67 112,024,704 61 Total non-current liabilities 235,610 - 944,411 1

NON-CURRENT ASSETS Total liabilities 86,588,946 52 106,333,096 58

Available-for-sale financial assets - non-current 183 - 214 -
Financial assets measured at cost - non-current 2,808,821 2 4,520,429 3 EQUITY
Investments accounted for using the equity method 219,320 - 5,477,519 3 Share capital - common stock 8,403,521 5 8,501,395 5
Property, plant and equipment 23,727,490 14 25,551,795 14 Capital surplus 14,840,181 9 15,475,351 8
Intangible assets 7,603,306 5 9,381,477 5 Retained earnings
Deferred tax assets 8,429,894 5 8,830,166 5 Legal reserve 18,149,350 11 18,149,350 10
Refundable deposits 264,723 - 174,859 - Special reserve - - 854,138 -
Long-term receivables 1,275,703 1 5,645,128 3 Unappropriated earnings 48,247,106 29 47,796,989 26
Prepaid pension cost - non-current 138,008 - 137,535 - Total retained earnings 66,396,456 40 66,800,477 36
Other non-current assets 10,018,132 6 11,738,813 6 Other equity 466,501 1 ( 298,498) -
Total non-current assets 54,485,580 33 71,457,935 39 Treasury shares ( 11,326,818) ( 7) ( 13,329,182) ( 7)
Total equity 78,779,841 48 77,149,543 42

TOTAL $ 165,368,787 100 $ 183,482,639 100 TOTAL $ 165,368,787 100 $ 183,482,639 100
 HTC CORPORATION AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT (UNREVIEWED)
(In Thousands of New Taiwan Dollars, Except Earnings (Loss) Per Share)

Nine Months Ended September 30

2014 2013
Amount % Amount %

REVENUES $ 140,045,152 100 $ 160,502,999 100

COST OF REVENUES 109,033,500 78 125,868,182 79

GROSS PROFIT 31,011,652 22 34,634,817 21

OPERATING EXPENSES
Selling and marketing 16,942,246 12 21,745,830 13
General and administrative 4,252,373 3 5,833,096 4
Research and development 9,281,987 7 9,466,735 6
Total operating expenses 30,476,606 22 37,045,661 23

OPERATING PROFIT (LOSS) 535,046 - ( 2,410,844) ( 2)

NON-OPERATING INCOME AND EXPENSES

Other income 478,981 - 956,771 1
Other gains and losses 527,308 1 ( 31,063) -
Finance costs ( 16,263) - ( 8,393) -
Share of the profit or loss of associates and joint ventures ( 8,184) - 146,795 -
Total non-operating income and expenses 981,842 1 1,064,110 1

PROFIT (LOSS) BEFORE INCOME TAX 1,516,888 1 ( 1,346,734) ( 1)

INCOME TAX 500,054 - 292,365 -

PROFIT (LOSS) FOR THE PERIOD $ 1,016,834 1 ($ 1,639,099) ( 1)

EARNINGS (LOSS) PER SHARE

Basic $ 1.23 ($ 1.97)
Diluted $ 1.23 ($ 1.97)
 HTC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNREVIEWED)
(In Thousands of New Taiwan Dollars)

Nine Months Ended September 30

2014 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Income (loss) before income tax $ 1,516,888 ($ 1,346,734)
Adjustments for:
Depreciation expenses 2,312,234 2,163,076
Amortization expenses 1,394,663 1,497,393
Impairment loss recognized on trade receivables - 1,009,364
Finance costs 16,263 8,393
Interest income ( 283,912) ( 409,458)
Dividend income ( 22,765) ( 16,282)
Compensation cost of employee share options 146,544 -
Share of the profit or loss of associates and joint ventures 8,184 ( 146,795)
Losses on disposal of property, plant and equipment 57,217 2,555
Gains on sale of investments ( 157,226) ( 29,735)
Impairment loss recognized on financial assets measured at cost 66,905 -
Impairment losses on non-financial assets 168,979 1,424,478
Ineffective portion of cash flow hedges / gains on disposal of subsidiaries ( 218) ( 175,436)
Net changes in operating assets and liabilities
(Increase) decrease in financial instruments held for trading ( 100,138) 26,821
Decrease in derivative financial instruments for hedging - 204,519
(Increase) decrease in trade receivables ( 1,863,189) 9,283,985
Decrease (increase) in other receivables 1,363,691 ( 683,523)
Decrease (increase) in inventories 221,274 ( 3,109,103)
Increase in prepayments ( 585,427) ( 1,906,586)
Decrease (increase) in other current assets 73,826 ( 105,440)
Decrease (increase) in other non-current assets 1,525,210 ( 1,880,323)
Decrease in note and trade payables ( 2,853,919) ( 19,213,479)
(Decrease) increase in other payables ( 2,914,319) 3,886,917
Decrease in provisions ( 1,658,824) ( 2,432,302)
Increase in other current liabilities 569,366 154,919
Cash used in operations ( 998,693) ( 11,792,776)
Interest received 210,319 452,839
Interest paid ( 16,263) ( 8,393)
Income tax paid ( 992,385) ( 3,302,711)
Net cash used in operating activities ( 1,797,022) ( 14,651,041)
 HTC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNREVIEWED)
(In Thousands of New Taiwan Dollars)

Nine Months Ended September 30

2014 2013
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds on sale of available-for-sale financial assets - 56,738
Payments to acquire financial assets measured at cost ( 432,463) ( 153,789)
Proceeds on sale of financial assets measured at cost 2,357,366 -
Net cash inflow on disposal of subsidiaries - 144,266
Payments for property, plant and equipment ( 920,733) ( 2,153,720)
Proceeds from disposal of property, plant and equipment 10,103 856
Decrease in refundable deposits 88,171 11,607
Decrease in other receivables - related parties - 6,600,093
Payments for intangible assets ( 227,947) ( 199,017)
Decrease in other current financial assets 2,770,357 3,755,517
Dividend received 22,765 661,896
Net cash generated from investing activities 3,667,619 8,724,447

CASH FLOWS FROM FINANCING ACTIVITIES

Increase in guarantee deposits received - 201,321
Refund of guarantee deposits received ( 216,324) -
Cash dividends - ( 1,662,455)
Payment for treasury shares - ( 409,024)
Net cash used in financing activities ( 216,324) ( 1,870,158)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS ( 281,012) ( 49,551)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,373,261 ( 7,846,303)

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 53,298,941 50,966,143

CASH AND CASH EQUIVALENTS, END OF PERIOD $ 54,672,202 $ 43,119,840